Trend analysis: Carbon removal procurement & offtakes — where the value pools are (and who captures them)

The carbon removal procurement market crossed $2.8 billion in cumulative contracted value by the end of 2025, up from $1.1 billion at the close of 2023. Yet the distribution of economic value across this rapidly scaling market is profoundly uneven. A small number of intermediaries, measurement platforms, and technology developers capture the majority of margins, while many removal suppliers operate at or below breakeven. Understanding where the value pools concentrate, who captures them, and how the landscape is shifting is essential for founders building in this space and for buyers seeking to optimize their procurement strategies.

Why It Matters

Carbon removal has transitioned from a niche voluntary market activity to a regulatory and reputational necessity for large corporations. The UK's Carbon Border Adjustment Mechanism, operational from January 2027, will require importers to account for embedded carbon, creating demand for verified removal credits to offset residual emissions. The EU's Carbon Removal Certification Framework, adopted in 2024, establishes quality standards that will shape procurement decisions for European buyers. In the United States, Section 45Q of the Internal Revenue Code provides tax credits of $180 per tonne for direct air capture with permanent geological storage, creating a floor price that de-risks long-duration offtake agreements.

Corporate net-zero commitments now cover organizations responsible for over 90% of global GDP, according to the Net Zero Tracker. Of these, the Science Based Targets initiative requires companies with validated targets to neutralize residual emissions through permanent carbon removal. This requirement, affecting over 7,000 companies globally, translates into projected procurement demand of 100 to 250 million tonnes of carbon dioxide removal annually by 2030, against current delivery capacity of approximately 2.5 million tonnes.

The gap between demand projections and supply capacity defines the market opportunity. But not all positions in the value chain offer equal returns. Founders and investors must identify which segments offer durable competitive advantages and which face commoditization pressure.

Key Concepts

Advance Market Commitments (AMCs) are binding purchase agreements for carbon removal credits at pre-agreed prices, typically structured 5 to 15 years before delivery. Frontier, the advance market commitment founded by Stripe, Alphabet, Meta, Shopify, and McKinsey, has committed $1 billion to purchase permanent carbon removal between 2022 and 2030. AMCs reduce demand risk for technology developers but require buyers to accept price uncertainty and delivery risk. The AMC structure has become the dominant procurement mechanism for novel removal technologies, accounting for approximately 65% of contracted volume for methods with Technology Readiness Levels below 7.

Offtake Agreements are bilateral contracts between a removal supplier and a buyer specifying volume, price, delivery timeline, and quality standards. Unlike AMCs, offtake agreements typically cover specific projects with defined delivery schedules and measurement, reporting, and verification (MRV) protocols. Offtake structures have become increasingly standardized, with the International Swaps and Derivatives Association (ISDA) publishing template documentation for carbon removal transactions in 2025. Standardization reduces transaction costs but also enables comparison shopping that compresses supplier margins.

Measurement, Reporting, and Verification (MRV) encompasses the technologies and protocols used to quantify the amount of carbon dioxide removed and the duration of its storage. MRV costs represent 8 to 15% of total removal costs for nature-based approaches and 3 to 6% for engineered solutions with more predictable outcomes. Third-party MRV providers including Isometric, Puro.earth, and CarbonPlan have emerged as critical gatekeepers whose certification determines market access and pricing.

Permanence Premium refers to the price differential between removal credits with long-duration storage (1,000+ years for geological sequestration) and those with shorter-duration storage (10 to 100 years for soil carbon or biochar). The permanence premium has widened from approximately 3x in 2023 to 5 to 8x in 2025, reflecting buyer preference for removal methods that satisfy Science Based Targets initiative requirements for neutralization claims.

Value Pool Analysis: Where the Margins Are

Technology Developers with Proprietary IP

Companies that have developed novel removal technologies with defensible intellectual property capture the highest gross margins in the current market. Direct air capture developers including Climeworks, Carbon Engineering (now 1PointFive), and Heirloom Carbon have signed offtake agreements at prices ranging from $400 to $1,000 per tonne, with estimated production costs of $250 to $600 per tonne for current-generation plants. The resulting gross margins of 30 to 50% reflect the scarcity premium for verified, permanent removal capacity.

However, these margins face compression as the industry scales. Climeworks' Mammoth plant in Iceland, operational since 2024 with 36,000 tonnes per year capacity, targets production costs below $400 per tonne. Their next-generation facility, announced for commissioning in 2028, aims for costs below $250 per tonne at 500,000 tonnes per year capacity. Learning rates of 15 to 20% per doubling of installed capacity suggest that direct air capture costs will converge toward $150 to $200 per tonne by the early 2030s, compressing margins for early movers unless they maintain cost leadership through proprietary process improvements.

MRV and Certification Platforms

The most structurally advantaged position in the carbon removal value chain may belong to MRV and certification platforms. These entities operate as trusted intermediaries between suppliers and buyers, charging fees of 3 to 8% of credit value for verification and registry services. The network effects are strong: buyers gravitate toward platforms with the largest pools of verified supply, while suppliers list on platforms with the most active buyer demand.

Isometric has emerged as the leading MRV platform for engineered carbon removal, with over $800 million in credits verified through its registry by the end of 2025. Puro.earth, acquired by Nasdaq in 2021, dominates the biochar and bio-based removal segment. CarbonPlan provides open-source tools and analysis that influence buyer perceptions and procurement criteria. The concentration of verification authority in a small number of platforms creates a toll-booth business model with recurring revenue and high switching costs.

Procurement Aggregators and Intermediaries

Organizations that aggregate buyer demand and channel it to removal suppliers capture significant value through markup, advisory fees, and portfolio management services. South Pole, Patch (now Watershed), and Sylvera have built businesses around simplifying carbon removal procurement for corporate buyers lacking internal expertise. These intermediaries typically charge 10 to 25% above supplier prices, justified by due diligence, portfolio construction, and ongoing monitoring services.

The UK-based intermediary market has grown rapidly, driven by London's position as the global hub for voluntary carbon markets. Firms including Respira International and Carbon Growth Partners have raised substantial funds to acquire removal credits in advance and resell them to corporate buyers at premium prices. This inventory model captures the spread between advance purchase prices (negotiated when removal capacity is pre-commercial) and spot or forward prices at the time of delivery.

Nature-Based Removal Suppliers

Suppliers of nature-based carbon removal, including enhanced weathering, biochar, and afforestation projects, occupy the most margin-pressured position in the value chain. Credit prices for nature-based removal range from $30 to $150 per tonne, depending on permanence, co-benefits, and verification rigor. Production costs consume 60 to 80% of revenue, leaving thin margins that are further eroded by MRV costs, registry fees, and intermediary commissions.

The exception is enhanced rock weathering, which has attracted significant buyer interest and commands prices of $80 to $200 per tonne. Companies including UNDO, Lithos, and Eion have signed substantial offtake agreements with corporate buyers including Microsoft, JPMorgan Chase, and H&M. Enhanced weathering benefits from agricultural co-benefits (improved soil pH and nutrient availability) that create dual revenue streams and improve unit economics relative to pure carbon removal.

Who Captures Value: Structural Dynamics

Three structural forces determine value capture in carbon removal procurement.

First, information asymmetry favors intermediaries and MRV platforms. Buyers face substantial difficulty evaluating removal quality, permanence, and additionality without specialized expertise. This asymmetry enables intermediaries to charge fees that compress supplier margins rather than buyer budgets. As buyer sophistication increases and standardized quality frameworks mature, intermediary margins will narrow, but the transition will take 3 to 5 years.

Second, capital intensity favors well-funded technology developers. Direct air capture plants require $500 million to $1 billion in capital for commercial-scale facilities. This capital requirement creates barriers to entry that protect margins for incumbents while excluding bootstrapped competitors. Access to project finance, tax equity partnerships (for 45Q credits in the US), and government grants (through the UK's Greenhouse Gas Removal programme) determines which technology developers can scale.

Third, regulatory fragmentation across jurisdictions creates arbitrage opportunities for platforms and intermediaries that operate across multiple markets. A removal credit verified under the EU Carbon Removal Certification Framework commands different prices than one verified under a voluntary standard such as Verra or Gold Standard. Organizations that can certify credits under multiple frameworks and route them to the highest-value market capture incremental margin that single-market participants cannot access.

Key Players

Removal Technology Leaders

Climeworks operates the world's largest direct air capture facility in Iceland and has contracted over $600 million in advance purchases. Their modular collector design enables standardized manufacturing.

1PointFive (Occidental Petroleum subsidiary, formerly Carbon Engineering) is constructing the STRATOS facility in Texas, targeting 500,000 tonnes per year capacity with 45Q tax credit support.

Heirloom Carbon uses enhanced mineral weathering in an accelerated process, achieving costs below $300 per tonne at their Tracy, California facility.

UNDO leads the enhanced rock weathering market from its UK base, deploying crushed basalt across agricultural land with verified removal rates of 2 to 4 tonnes CO2 per hectare per year.

Intermediaries and Platforms

Frontier has catalyzed the advance market commitment model, directing over $1 billion in committed purchases to 30+ removal companies across multiple technology pathways.

Isometric provides the dominant MRV and registry platform for engineered removal, with scientific review processes that have become the de facto quality standard for buyer procurement.

Watershed (formerly Patch) offers integrated carbon management software with embedded procurement capabilities, serving over 1,000 corporate clients.

Key Investors

Breakthrough Energy Ventures has deployed capital across the removal value chain, including investments in direct air capture, enhanced weathering, and ocean-based removal approaches.

Lowercarbon Capital focuses exclusively on climate technology, with substantial investments in removal companies including Heirloom, Charm Industrial, and Running Tide.

Action Checklist

• Map your position in the carbon removal value chain and assess whether you occupy a structurally advantaged or disadvantaged segment
• Evaluate whether your technology or service benefits from network effects, switching costs, or regulatory moats that protect margins
• For removal suppliers: pursue multi-framework certification to access the highest-value markets for your credits
• For buyers: develop internal procurement expertise to reduce reliance on intermediaries and capture the 10 to 25% markup they charge
• Structure offtake agreements with price adjustment mechanisms that reflect learning curve cost reductions
• Monitor the UK Greenhouse Gas Removal programme and EU Carbon Removal Certification Framework for regulatory signals that will shape demand
• Assess the permanence premium trajectory and position your offering accordingly as buyer preferences evolve

Sources

• CDR.fyi. (2025). Carbon Dioxide Removal Purchases Tracker: Annual Report 2025. Available at: https://www.cdr.fyi
• Frontier. (2025). Advance Market Commitment Progress Report 2024. San Francisco: Stripe Climate.
• Smith, S. et al. (2025). State of Carbon Dioxide Removal: Second Edition. Oxford: University of Oxford.
• International Swaps and Derivatives Association. (2025). Carbon Removal Credit Transaction Documentation. New York: ISDA.
• Department for Energy Security and Net Zero. (2025). UK Greenhouse Gas Removals: Policy Framework and Market Update. London: DESNZ.
• BloombergNEF. (2025). Carbon Removal Market Outlook Q4 2025. London: Bloomberg LP.
• CarbonPlan. (2025). CDR Verification Framework: Methodology and Assessment Reports. San Francisco: CarbonPlan.